Toyota announces production freeze

Toyota has seen sales of its cars plunge as the global financial crisis erodes demand [GALLO/GETTY]

In a statement Geely also noted that while other carmakers are warning of major redundancies among staff, it planned to avoid any layoffs from its workforce.

Toyota said the closure of its plants for six days in February and another five days in March was an effort to reduce a growing backlog of unsold cars.

"We are coping with a slump in global sales,'' Hideaki Homma, a Toyota spokesman, told reporters in Tokyo.

"Demand in the world auto market is so depressed that every model is falling sharply in sales."

US sales plunge

Toyota said further plant shutdowns may follow if demand does not recover [GALLO/GETTY]

The company said the last and only time it had halted production at all its Japan plants was in August 1993, when demand plunged because of a rising yen, and that was for only one day.

Last month Toyota saw sales in the US, its biggest market, plunge 37 per cent - it's weakest performance in more than a quarter of a century.

That was worse than the sales drops seen by US rivals Ford and General Motors, who saw falls of 32 per cent and 31 per cent respectively in the same month.

Two weeks ago Toyota warned it would post its first-ever annual operating loss, which it blamed on plummeting global sales and a spike in the value of the yen, which makes Japanese exports more expensive internationally.

On Monday, data showed Toyota's sales in its home market of Japan slid 18 per cent in December, with total sales down 7.4 per cent for the whole of 2008.

Geely optimistic

Geely has ambitious plans to become a major name in the global car industry [GALLO/GETTY]

The gloomy news from Toyota stood in stark contrast to the optimistic outlook given by China's Geely, which said it was targeting a 25 per cent increase in sales for the year ahead with the launch of eight new models.

Most car makers around the world have put launches of new models on hold in the hope that demand will begin to pick up again.

Geely gave no details on how it planned to increase sales.

Headquartered in the eastern Chinese city of Hangzhou, close to Shanghai, Geely began manufacturing refrigerators in 1986 and moved to producing cars in 1998.

It made its first exports in 2003 and has previously unveiled ambitious expansion plans to become one of the world's leading automakers.

In its statement Geely did not say how many cars it sold in 2008, but said its domestic auto sales grew 11.6 per cent, while export sales jumped 79.8 per cent.

After several years of double-digit growth, Chinese car sales slowed significantly last year, particularly in the second half, as a weakening economy put the brakes on demand.